Ross, David P., and Clarence Lochhead, "Poverty". In The Canadian Encyclopedia. Historica Canada. Article published January 24, 2007; last modified March 04, 2015. https://www.thecanadianencyclopedia.ca/en/article/poverty

Poverty

About nine per cent of Canadians live in poverty, although the percentage is generally higher among certain groups such as single mothers and Aboriginal people. Low-income Canadians include the "working poor" — those with jobs — and the "welfare poor" — those relying mainly on government assistance.

Children playing in the street (courtesy Library and Archives Canada/C-30947).

This photograph taken from the roof of the T. Eaton Company factory shows the neighbourhood commonly called the Ward, bounded by Yonge, Queen and College Streets and University Avenue. It was the worst slum in the city (courtesy James Collection, City of Toronto Archive).

About nine per cent of Canadians live in poverty, although the percentage is generally higher among certain groups such as single mothers and Aboriginal people. Low-income Canadians include the "working poor" — those with jobs — and the "welfare poor" — those relying mainly on government assistance. Since the 1960s numerous public programs have been created to alleviate poverty, including Employment Insurance, pension programs for the elderly and various child benefits and tax credits.

Measuring Poverty

In 2013, Statistics Canada reported that 8.8 per cent of Canadians had low incomes in 2011. That figure was down from 15.2 per cent in 1996. Statistics Canada uses a Low-Income Cut-Off (LICO), which is based on half the national median income. The government also uses a Market Basket Measure, which looks at low income based on the cost of a specific basket of goods and services. The government records data on the working poor — households where the main earner is working at least 910 hours a year and living with a low income — and breaks down low income figures by various demographics.

Poverty rates among Aboriginal Canadians are significantly higher compared to the rest of the population, according to a 2013 report by the Canadian Centre for Policy Alternatives. It showed that half of the status First Nations children in Canada live in poverty, a figure that increases to two-thirds in Saskatchewan and Manitoba. The study was based on the 2006 census data and found that children on reserves under federal jurisdiction were in the worst situation, often living with poor drinking water and in run-down homes.

Establishing an objective measure of poverty in Canada is difficult. There are two distinct and opposing methods used to illustrate the basic level of income that defines poverty – absolute and relative.

The absolute approach is based on the belief that poor people only require the absolute necessities of life that can be objectively established, such as substandard housing and the bare essentials of food and clothing. This view stems from the belief that poverty is an individual's own doing and should not be rewarded or encouraged by the provision of adequate levels of social assistance. The Fraser Institute has published poverty lines based on a limited market basket of goods designed to ensure minimal physical survival. The levels of income provided by provincial and municipal authorities for welfare recipients also ensure only absolute (or substandard) levels of living. The relative approach rejects the absolute notion that poverty can be objectively defined without reference to prevailing community standards. Rather, a poor Canadian household exists in the context of a highly interrelated, prosperous Canadian community, therefore the economic, social and political functioning of that household is relevant.

A well-known national measure based on the relative approach is the one developed by the Canadian Council on Social Development, a non-profit organization, and the special Senate committee on poverty. The CCSD poverty line is based on average Canadian family income. If a family income is less than half of average family income, it is defined as poor. Adjustments are then made for family size but not for place of residence.

Annual Survey of the Poor

Canada is one of the few countries to conduct an annual survey of the poor, and this approach has become the most prevalent and respected measure of low income. For its annual survey, Statistics Canada begins with an income line based on the actual share of income that an average Canadian family devotes to food, clothing and shelter purchases (thus the amount of income allotted to poor families is related to the expenditure standards of the community), and then adds 20 per cent to this share. Any family that must spend more than this share of its income on food, clothing and shelter has so little discretionary income that it is considered to be living in "straightened circumstances."

As the living standard of the average Canadian household has risen over time, so has the poverty line. (See standard of living.) Statistics Canada adjusts its income line for family size, and according to whether the household is located in an urban or rural setting. The poverty line for rural households is about 30 per cent lower than that for urban households.

Calculating the number of people who are poor is done through a sampling survey of Canadian households (excluding Aboriginal households on reserves, individuals living in institutions and those living in the northern territories). After sample income data is collected, and projections made for the Canadian population as a whole, family and individual incomes are ranked according to whether they fall above or below the low-income cut-offs. The published results from Statistics Canada make it possible to determine how many individuals and families are poor, as well as the characteristics of these households. (See income distribution and population.)

International Ranking

In 2008, The Organization for Economic Co-operation and Development (OECD) looked at how Canada ranks internationally and on that basis found that “after 20 years of continuous decline, both inequality and poverty rates have increased rapidly in the past 10 years, now reaching levels above the OECD level.” It also stated: “Over the past 10 years poverty (meaning people who live on less than half the median incomes) has increased for all age groups, by around two or three percentage points to an overall rate of 12 per cent.” The OECD reported a six per cent poverty rate among older people but said 15 per cent of Canadian children are living in poverty.

The OECD also said the rich in Canada are particularly rich compared to counterparts in other countries, and the poor and middle classes are also richer than the OECD average, but by less. It attributed some of the income inequality to changing demographics — more single parents and people living alone.

Family Poverty

Among low-income families in Canada, slightly more than half are headed by a person in the labour force. These families are frequently referred to as the "working poor" because they rely primarily on employment earnings, not public assistance, for their income. The working poor include workers on the margin of the labour force. They are frequently the last hired and the first laid off, but even when they are employed they work for low wages and poor benefits. They are seldom able to accumulate savings, and rarely qualify for benefits such as sickness insurance, health and dental plans, private pensions and paid vacations. Their lives are marked by extreme economic insecurity.

The other half are referred to as the "welfare poor." They rely primarily on some form of public assistance. Lone-parent mothers make up a large portion of this category. So do Aboriginal people, although the reasons for their situations are sometimes complicated by the long history of prejudice and discrimination.

Since about 1973, the family poverty rate has stabilized around the 12 to 15 per cent level. But there have been noticeable shifts in the composition of poor households. In 1967, a family in the Atlantic provinces had almost three times the chance of being poor as a family in Ontario. However, by 1997 the poverty rate for families in Ontario was 13 per cent, and for those in the Atlantic Provinces it was 15 per cent. The economy and other factors such as changing demographics impact low income figures over time.

Poverty has also been "urbanized." In 1967, 45 per cent of all poor families were rural dwellers, but by 1997 this share had declined to 12 per cent. In the larger cities of more than 500,000 people, the proportion of poor families increased from 18 per cent (1967) to 57 per cent (1997).

For the elderly in 1967, families headed by a person 65 years of age or older constituted 27 per cent of all poor families, but by 1997 this had dropped to seven per cent. On the other hand, female-headed families constituted 15 per cent of all poor families in 1967, but 36 per cent by 1997. The shift in the composition of poverty among families has been so dramatic that poverty is less strongly associated with old age than with being female. (See women in the labour force.)

Most of the decline in poverty among the elderly has taken place in recent years, primarily as a result of gradual improvements in government-funded income retirement programs. Improvements in programs such as the Canada Pension Plan, Quebec Pension Plan, old-age pension, Guaranteed Income Supplement, Spouses' Allowance and some provincial income supplement programs have helped more elderly people escape poverty. (See Social Security.)

Duration of Poverty

Poverty is a temporary situation for approximately 60 per cent of the poor population in any year, but for the remaining 40 per cent it is a persistent problem that lasts for years. Over a 10-year period, poor persons will spend on average about five years in poverty, after counting both single and multiple episodes. About five per cent of poor persons will experience a continuous spell of poverty lasting 10 years, and 15 per cent will experience a spell of poverty longer than four years. Lone parents, persons with disabilities, recent immigrants and persons with lower levels of education are more likely to live in poverty for extended periods of time.

Efforts to Fight Poverty

National measures of poverty in Canada date to the 1960s, when poverty became a public issue. Much of the concern was generated by the appalling living conditions under which many of Canada's Aboriginal people and elderly lived, and also by large regional income disparities. This sudden "discovery" of poverty contradicted the vision of affluence that prevailed in the postwar era. In 1964 the United States launched its "war against poverty" and Canada began a more quiet campaign of study and legislation in an effort to understand the causes and remedies. In 1965, the federal Privy Council Office established a group of specialists to study and encourage greater federal-provincial co-operation in combating poverty. In the same year, the Company of Young Canadians was created to help co-ordinate and stimulate local self-help efforts. Although the CYC was later disbanded, it was a precursor of federal government programs such as Opportunities for Youth, the Local Initiatives Program and Canada Works, which attempted to provide employment and reduce poverty through local initiative efforts in the 1970s and 1980s.

In 1968, Statistics Canada released a study on the incomes of Canadians that became the basis for defining and measuring low incomes in Canada. In the same year, the Economic Council of Canada shocked the nation by using this new low-income measure to estimate the extent of poverty in Canada. It concluded that 27 per cent of the Canadian population lived in poverty. In 1968, partly because of these findings, the influential special Senate committee on poverty, chaired by David Croll, began its cross-country hearings and investigations. Its widely publicized report, released in 1971, reiterated much of what had been revealed in the ECC's report and proposed a guaranteed annual income program to eliminate poverty in Canada.

Another influential commission created during this period, headed by CLAUDE CASTONGUAY, also released its report following a massive examination of social security in Québec. This commission also advocated (among many recommendations concerning health care, income security, employment and social services) a guaranteed annual income.

The concern during the 1960s also led to several new pieces of anti-poverty legislation. Negotiations between the provinces and the federal government, which began in 1964, resulted in the introduction of the Canada and Québec pension plans, which were based on the recognition that the private pension system did not provide adequate coverage to low-income retired workers and their families. (See pension.) In conjunction with these new pension plans, the Guaranteed Income Supplement Program was implemented, which assured a basic income support level to all low-income seniors.

The Canada Assistance Plan was also introduced in 1966. As a comprehensive social-assistance program it replaced the federal and provincial governments' piecemeal cost-shared programs, some of which had been in place since 1927. As well as providing a major source of funds for the disabled and unemployed, the CAP assisted other low-income persons, including the working poor. Also brought into federal cost-sharing under CAP were a wide range of Social Services, including day care, family counselling, visiting homemaker and child welfare services.

Exponents of CAP claimed it would allow for the distribution of funds to the needy who could not secure sufficient aid. In practice, however, CAP maintained the earlier tradition of only responding to poverty. In the 1995, budget, CAP was replaced by the Canada Health and Social Transfer. This new funding arrangement merged federal transfer payments for social assistance (previously under CAP) with those for health and post-secondary education into a single "block" fund transfer. (See equalization payments.) As a result, provinces now have greater discretion over social programs' spending, including those programs intended to alleviate or prevent poverty. (See Health Policy and Intergovernment Finance.)

During the 1970s and early 1980s, most legislative activity either represented slight improvements to, or cutbacks in, earlier legislated programs. The Unemployment Insurance Act was amended in 1971 to provide more extensive coverage to the unemployed and to the sick. The Child Tax Credit of 1978 extended federal benefits to families with children in a manner that was most beneficial to low-income families. (See Family Allowance.) Several provinces instituted income-tested payments to the aged, while Saskatchewan, Manitoba and Québec introduced programs that provided assistance to the families of the working poor. But the comprehensive federal-provincial review of Canada's social-security system, conducted in the mid-1970s, failed in its central purpose to establish a guaranteed annual income. The 1980s, meanwhile, were marked by budget cuts on income provision and social services directed towards the poor. These cuts were accelerated in the 1990s.

In an effort to combat child poverty, the Canada Child Tax Benefit (CCTB) was introduced in 1998. The CCTB had two main elements: the base benefit, paid monthly to an estimated 80 per cent of Canadian families with children, and the National Child Benefit Supplement (NCB-S) for low-income families with children.

Why So Many Poor?

The concern and legislation of the 1960s also raised the question of why there were so many poor people in a country as rich as Canada. In the prevailing ethos, poverty is perceived and treated as an individual, not a social problem — for example, individuals who are poor have themselves to blame. Therefore, it is not a country's total wealth that is relevant, but how that country distributes its wealth. A society can distribute its wealth under the laissez-faire or free-enterprise economic system, where people are presumed to get back from the marketplace what they put in. Under this system those who work at home for their lifetimes receive nothing directly. Theoretically a society can also distribute its wealth through a collective or socialist system under which the fruits of economic production are distributed according to need.

The economic and income distribution system in Canada is still evolving from the precepts of 19th-century capitalism, although government involvement in the income distribution process ensures that those in need and those without economic means do receive some assistance. Thus the Canadian system is generally described as mixed. Most wealth is distributed through a market-based economic system, under which ownership of resources and well-paying jobs are the keys to an adequate share of the country's economic benefits. Those who are unable to find a decent place within this market system — persons with disabilities, Aboriginal peoples and those with poor job skills — must rely on some combination of assistance from family, social organizations and government. But because individuals are held responsible for their inability to benefit from the economic system, the amount of aid is generally small.